he state of California is apparently on the brink of a power crisis: officials are considering "rolling blackouts" (the sort of electricity management strategy used in places like Cuba), and the governor is not lighting his Christmas tree this year, all in an effort to save precious wattage. So what's the problem? Why is the state whose economy is most famously powered by electrical appliances such as IBM servers and Cisco routers on the verge of browning out?

Well, according to economist Paul Krugman, who recently won some valuable regular real estate on the New York Times op-ed page, it's too much freedom. In a rather hysterical column Sunday, Krugman complains that the state's recent drive to deregulate the electricity industry has led to "a shortage that has proved highly profitable to power companies, and raised suspicions of market manipulation." The author goes on to warn, in keeping with his Times bosses' general suspicion of individual economic choice, that "the experience raises questions about deregulation. And more broadly, it is a warning about the dangers of placing blind faith in markets."

According to Krugman — who writes like someone who needs a little refresher in Econ 101's lessons on the laws of supply and demand — by giving power companies and consumers choice, the state has issued an engraved invitation to market manipulation. "Suppose that it's a hot July, with air-conditioners [sic] across the state running full blast and the power industry near the limits of its capacity. If some of that capacity suddenly went off line for whatever reason, the resulting shortage would send wholesale electricity prices sky-high. So a large producer could actually increase its profits by inventing technical problems that shut down some of its generators, thereby driving up the price it gets on its remaining output." Adds Krugman charitably, and perhaps with one eye on the libel laws, "maybe California power companies aren't rigging electricity prices. But they clearly have both the means and the incentive to do so."

Of course, in the Krugman (and New York Times) worldview, the free market is nothing more than a dangerous place where big, rapacious companies swoop down to fleece consumers, who are in constant need of government protection. So perhaps it's not surprising to see that Krugman completely ignores a much more obvious cause of California's energy woes — namely, this country's backward energy policies. One of the reasons why California is in such trouble electricity-wise is that power plants across the state have been shut down for violating increasingly stringent clean air laws (though some of them are being reopened as a result of the current crisis), thus causing a power shortfall. Compound this with a Clinton administration that has not only done everything possible to stymie domestic oil exploration (roping off millions of acres from any sort of development via executive order) but has encouraged natural gas usage while discouraging new sources of the stuff from being developed, and you have a recipe for exactly what is going on in California now. More worrisome, California's troubles could also be a harbinger of things to come across the country.

But instead of looking to the true perversions of the market, caused by an EPA and administration who refuse to acknowledge that a limited amount of pollution is the acceptable consequence of industrial activity, Krugman sees evil only in those outfits that are trying to make the best of a bad situation, and warns readers against being seduced by "enthusiasts for market solutions for everything from prescription drug coverage to education." Better, in Krugman's view, to let a self-appointed mandarin class of regulators parcel out electricity (and lots of other things, presumably), and avoid any upsetting fluctuations in price. After all, this theory has worked so well across the world for decades. I hear the Cubans are having great success with this now.